Big box interchange bill isn't solution for small businesses

November 29, 2023

There's no evidence of the benefits claimed by supporters of the big box interchange bill, Maine Credit Union League Vice President of Governmental Affairs Robert Caverly wrote in the Portland Press Herald Wednesday. 

"The Credit Card Competition Act’s supporters claim their proposal will lower fees for small businesses by increasing competition. But there is no evidence that the bill will achieve this goal," he wrote. "Credit unions provide credit cards as a valued service to their members. They do not offer this benefit because they are making money off the interchange fees."

Caverly cited Federal Reserve data showing credit card costs at credit unions are an average of 23 cents higher per transaction than interchange revenue, but credit unions provide these programs to increase access to affordable credit. 

"Merchants know there are costs associated with taking any form of payment – including cash. The average cost of accepting cash can be as high as 9.1% of the transaction. That is three times more than typical interchange fees. But because interchange fees are collected after a transaction occurs, it can feel as if the big credit card providers are squeezing local merchants for extra money. In fact, it is simply part of the overall cost of keeping the entire payments system safe," he wrote. 

"The proposed regulation has not had a formal congressional hearing, which is cause for additional concern. This has not stopped the proponents of the Credit Card Competition Act from advocating for this legislation in the court of public opinion through op-eds and misleading figures. Lawmakers should explore all the potential ramifications before enacting such sweeping policy changes," Caverly added.